Nearly two years after acquiring Jabong from Global Fashion Group for $70 million (about Rs 4.7 billlion), Flipkart-owned fashion retailer Myntra is looking to increase differentiation between the two brands in order to win new customers.
Myntra will continue to focus on the mass premium fashion segment where it has emerged as the leader, while Jabong will begin to focus more on luxury brands, global brands and the premium fashion segment.
"Given our observations on Jabong we have continued to focus on the mass premium segment, but within that we are specialising in global brands, luxury and premium fashion," said Gunjan Soni, Chief Marketing Officer at Myntra and Head of the Jabong unit.
The move to differentiate Myntra and Jabong comes despite the customer overlap between the two platforms being just 28 per cent. Even after 18 months of the acquisition, customers of Jabong continue to be largely different from those on Myntra, with just a two percent increase in overlap, added Soni.
Jabong focus on slightly higher end fashion products might result in a slowdown in its speed of customer acquisition, but this is going to become a focus area for Myntra. The company says the Myntra brand will begin driving adoption among the next wave of online shoppers in the country.
Both Myntra and Jabong today have a combined base of 12 million customers, a small subset of the 100 million customers parent Flipkart claims to have. Myntra will also continue to drive the group’s push into offline fashion retail, opening stores for its in-house brands as well as for brands with which it has partnered.
“It's immaterial for customers whether we offer experiences through our store or other brands. We want to work with brands to offer the online and offline convergence in the most powerful way possible. So we won't limit ourselves to the brands that we sell," added Soni.
While Myntra has opened its first offline store for its in-house brand Roadster in Bengaluru, the company also runs stores for Barcelona-based fashion brand Mango in India. Myntra is looking to sign up more such deals where it acts as the master franchisee for global brands and is even willing to supply apparel to third-party sellers if brands ask them to.
This focus on in-house brands along with partnerships with global brands is driving Myntra’s margins up. The company had said it will become profitable at an earning before interest, tax, depreciation and amortisation (EBITDA) level by March 2018, with its private label business which accounts for about a quarter of its overall revenues, turning profitable sometime last year.
However, while the company might break even operationally, it will take some time to turn profitable on a net basis. "We are structurally very close to profits. Our main goal over the next 2-3 years is to drive the next wave of adoption and we may choose to invest back some of this profits to enable further growth," said Soni.